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Salinas Plays It Cool After Big Win on NAFTA

DOUBTS IN MEXICO, TOO

By Staff writer of The Christian Science Monitor / November 19, 1993



MEXICO CITY

PRESIDENT Carlos Salinas de Gortari isn't crowing about the North American Free Trade Agreement. Instead, he has one eye on the sluggish Mexican economy and the other on next year's elections. But it is no secret that NAFTA's passage is the crowning achievement of his administration.

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``NAFTA is the gold seal on all of the economic changes made during the Salinas administration,'' says Arturo Sanchez Gutierrez of the Mexican Institute of Political Studies.

In his historic moment of triumph, a calm Mr. Salinas sought to quell the ``excessive expectations'' reflected in the record highs set earlier this week by the Mexican stock exchange.

``The agreement ... will generate jobs for our country,'' Salinas said in a post-NAFTA-vote press conference. But he warned that NAFTA ``won't modify our economic and social plans nor diminish our efforts to diversify our relations.''

The envy of developed and developing nations, NAFTA gives Mexico entry to the world's biggest and wealthiest free trade zone. It helps ensure the continued flow of foreign investment into Mexico. It brings long-term continuity to Salinas's market-oriented reforms and fiscal discipline. And it brings at least some of Mexico's 90 million citizens a step closer to Salinas's stated ambition of making Mexico ``a part of the first, not the third world.''

Mr. Sanchez says the passage of NAFTA also takes the pressure off Salinas in choosing his successor as leader of the Institutional Revolutionary Party (PRI), which has not lost a presidential election in six decades. By law, Salinas cannot run for reelection.

``NAFTA limits his successor's options, essentially locking in the Salinas economic model. It also means that the PRI will probably win the 1994 elections - no matter who the successor is,'' Sanchez says.

If NAFTA was voted down, analysts say Mexican opposition parties would have had a big opportunity. Without NAFTA, foreign investment flows would have slowed. Tepid economic growth would have fed opposition criticism of the Salinas reforms and his ``foolish'' attempt to buck political traditions by opening up Mexico to its unpredictable northern neighbor.

Now, NAFTA and Salinas's economic reforms are facts of Mexican political life. Even Mexico's center-left opposition party leader Cuauhtemoc Cardenas Solorzano admits this. ``NAFTA marks the end of an important stage in the life of our country,'' he said in a written statement. ``Whether we like it or not, NAFTA will become the new institutional framework for regulating our economic and financial relations with the US and Canada.''

Berta Elena Luthan, a labor union leader in Mexico's small anti-NAFTA movement, calls NAFTA's passage an ``unfortunate deepening of an economic model that creates an unjust distribution of wealth.'' Mexico now has more billionaires than ever in its history, she notes, while some 40 million Mexicans live in poverty.

Political scientist Jorge Castaneda, a NAFTA critic, laments the lack of debate over the treaty in Mexico. The Mexican Senate, where the PRI controls 61 of 64 seats, is expected to pass NAFTA next week.

``A majority in the US House of Representatives agrees that this is in the United States' best interest. There has been no such debate here,'' Mr. Castaneda says. ``After all we've given up, if the net result of five years of this economic model is 1 percent growth and a prediction of 3 percent growth next year - is this such a good deal for Mexico? Salinas won. But is he right?''

Commerce Minister Jaime Jose Serra Puche contends that the debate here has gone on since the start of the negotiations. ``It would be hard to find a single day when the NAFTA wasn't a theme in the columns of the principal national newspapers. I've been in the Senate 11 times debating the treaty.''

As the Salinas modernization program advances, forcing Mexican companies to become more competitive (in many cases laying off workers), the opposition strategy will be to continue to try to sow doubts about Mexico's participation in NAFTA.

Mr. Cardenas proposes the creation of a multiparty oversight commission to monitor NAFTA's impact on the Mexican economy, environment, and labor conditions. The aim would be to determine, in six months, whether renegotiation or withdrawal from the treaty is warranted.

Meanwhile, the Mexican government is trying to counter arguments that Mexico is subordinating its economic future to US and Canadian influences by emphasizing other pending trade agreements.

Three times during his five-minute speech on the eve of NAFTA's passage, Salinas spoke of Mexico's efforts to ``diversify'' relations. Mexico is close to finalizing a free trade pact with Colombia and Venezuela. And, today, Mexico is expected to become a member of the Asia-Pacific Economic Cooperation forum.